Here comes the other economic shoe dropping...

[Coito ergo sum]

http://politics.usnews.com/opinion/mzuc ... -real.html The Danger of a Global Double Dip Recession Is Real
The deficits we face are a dagger pointing at the heart of the American economy

[Coito ergo sum]

US Ready to Back Bigger EU Stability Fund: Official
Published: Wednesday, 1 Dec 2010 | 2:20 PM ET Text Size
By: Reuters
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The United States would be ready to support the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund, a U.S. official told Reuters on Wednesday.



"There are a lot of people talking about that. I think the European Commission has talked about that," said the U.S. official, commenting on enlarging the 750 billion euro ($980 billion) EU/IMF European stability fund. "It is up to the Europeans. We will certainly support using the IMF in these circumstances."

"There are obviously some severe market problems," said the official, speaking on condition of anonymity. "In May, it was Greece. This is Ireland and Portugal. If there is contagion that's a huge problem for the global economy."

The remarks foreshadow a visit to Europe this week by a U.S. Treasury envoy who is expected to visit Berlin, Madrid and Paris to hold talks on the ramifications of the debt crisis.

http://www.cnbc.com/id/40454469

[eXcommunicate]

The deficits we face are a dagger pointing at the heart of the American economy

Is your solution "austerity" in the face of recession? Slashing Medicare and Social security, unemployment benefits and stimulus spending?

[Coito ergo sum]

The deficits we face are a dagger pointing at the heart of the American economy

Is your solution "austerity" in the face of recession? Slashing Medicare and Social security, unemployment benefits and stimulus spending?

Austerity appears to be what's recommended by Britain and Germany.

My solution is to reduce spending and increase revenues.

First, I would start with government waste, which is rampant.

Second, I would bit the bullet and cut most government programs as much as possible.

Third, I would take a look at taxes. I don't subscribe to the notion that decreasing income tax rates always increases revenues (an idea that is bandied about on conservative shows) - I mean - if that was the case, then we ought to reduce the rate to 1% and then revenues should increase astronomically. That, of course, isn't how it works. It's a curve, and depending on where the tax rate is on the curve (which requires economic analysis), revenues may increase by raising tax rates, and that may be necessary. Other taxes might need to be considered, like a national sales tax or something like that in order to cover the shortfall.

The reason we have a deficit is simple: We are spending more money than we are taking in in revenues. There is only one solution to that - take in more revenues and/or reduce spending so that the amount spent is closer to or equals the amount of revenues for the year.

Stimulus spending only makes sense if it's expected that the economy will turn around soon enough and well enough so that the size of the economy is increased, thereby reducing the total amount of deficit and debt as a percentage of the size of the economy goes down considerably, and also that tax revenues as a result of the larger economy go up thereby reducing the shortfall. The problem with the stimulus spending, as I see it, is that nobody is predicting the necessary turnaround, and instead we are being told by many economists that high unemployment rates are going to be chronic for some time now. And, I see no indication that the United States is going to experience an industrial boom or something equivalent to the tech boom of the 1990's.

The reason we got a balanced budget in the 1990s had quite a lot to do with the fact that tax revenues increased dramatically with the tech bubble. What we need is industry and economic development, so that the economy can expand and we can have more tax revenues to pay for all the spending. If we can't have that, and it doesn't look like we will be getting that anytime soon, then we have no choice but to cut spending and increase revenues via tax, tariff, fees, and other revenue generators.

[Warren Dew]

I'm still kind of hoping this subthread will be split off so everyone will feel comfortable discussing it.

I'm still kind of hoping the posts that were moved regarding whether a manufacturing economy is needed will be split off into their own thread. The topic is more about the long term, while this "other economic shoe dropping" thread is about the short term.

[Warren Dew]

The deficits we face are a dagger pointing at the heart of the American economy

Is your solution "austerity" in the face of recession? Slashing Medicare and Social security, unemployment benefits and stimulus spending?

I would certainly slash those things. I don't know to what extent it would be "austerity", though; cutting those all back to 2000 levels would be fine.

[Coito ergo sum]

The deficits we face are a dagger pointing at the heart of the American economy

Is your solution "austerity" in the face of recession? Slashing Medicare and Social security, unemployment benefits and stimulus spending?

Is your solution "spendthrift" in the face of recession? Increasing Medicare and Social Security, increasing and extending unemployment benefits indefinitely and increasing stimulus spending? Is that how you address the massive deficits?

[GreyICE]

The deficits we face are a dagger pointing at the heart of the American economy

Is your solution "austerity" in the face of recession? Slashing Medicare and Social security, unemployment benefits and stimulus spending?

Is your solution "spendthrift" in the face of recession? Increasing Medicare and Social Security, increasing and extending unemployment benefits indefinitely and increasing stimulus spending? Is that how you address the massive deficits?

Isn't the time for austerity in government when people need the government the least, not the most?

[Feck]

The deficits we face are a dagger pointing at the heart of the American economy

Is your solution "austerity" in the face of recession? Slashing Medicare and Social security, unemployment benefits and stimulus spending?

Is your solution "spendthrift" in the face of recession? Increasing Medicare and Social Security, increasing and extending unemployment benefits indefinitely and increasing stimulus spending? Is that how you address the massive deficits?

Isn't the time for austerity in government when people need the government the least, not the most?

No don't be silly the time to fuck over the poor is when there are more of them ... that way you increase the gap between the the rich and the poor .

I don't understand it very well but I think the idea is that more money will eventually trickle down to where it's needed if first it's given to a few people who have so fucking much they don't need more .

[Warren Dew]

Isn't the time for austerity in government when people need the government the least, not the most?

People don't need medicare and social security any more during a recession than at any other time. Those people are retired; they don't have any income to be affected by the recession.

The current overly generous unemployment benefits are actually helping to keep the economy from recovering by giving people an incentive not to go back to work. Allowing it to go back towards prerecession levels will actually help the recovery. The same is true for many of the stimulus programs.

[Coito ergo sum]

The deficits we face are a dagger pointing at the heart of the American economy

Is your solution "austerity" in the face of recession? Slashing Medicare and Social security, unemployment benefits and stimulus spending?

Is your solution "spendthrift" in the face of recession? Increasing Medicare and Social Security, increasing and extending unemployment benefits indefinitely and increasing stimulus spending? Is that how you address the massive deficits?

Isn't the time for austerity in government when people need the government the least, not the most?

No don't be silly the time to fuck over the poor is when there are more of them ... that way you increase the gap between the the rich and the poor .

I don't understand it very well but I think the idea is that more money will eventually trickle down to where it's needed if first it's given to a few people who have so fucking much they don't need more .

Actually, the idea is that you can spend more money when you have more money to spend. The reality is that stuff costs money. It's not free. You can't have free food, for example, without someone planting it, growing it, harvesting it, and transporting it to end users for free. If there is a way to change that, I'd surely love to hear it. When there is a recession, there is certainly an option to go into debt to carry an organization through the the bad time. There are limits, however, and this:



...can't go on forever. At some point the system can and might just break down, and that would be pretty bad for the poor in general.

At some point, bills have to be paid.

[Coito ergo sum]

The deficits we face are a dagger pointing at the heart of the American economy

Is your solution "austerity" in the face of recession? Slashing Medicare and Social security, unemployment benefits and stimulus spending?

Is your solution "spendthrift" in the face of recession? Increasing Medicare and Social Security, increasing and extending unemployment benefits indefinitely and increasing stimulus spending? Is that how you address the massive deficits?

Isn't the time for austerity in government when people need the government the least, not the most?

In the best of all possible worlds, yes. However, like the fable of the grasshopper and the ant, when there are surpluses, our grasshoppers in Congress decide it's more of an opportunity to spread the largess.

Now, when there isn't any money, there isn't any money. Some debt is o.k., but regardless of any altruistic sentiments we have, we can't simply ignore the debt as if it doesn't exist or doesn't matter. It would be far worse for the poor in the long run to do that - far worse for everyone - because our economic system can collapse.

[Coito ergo sum]

US unemployment rate up to 9.8%, in November....which would normally be a good month for unemployment due to the holiday season hiring increases in the retail industry.... http://online.wsj.com/article/SB1000142 ... TopStories

Disappointing numbers indeed...

[Warren Dew]

At some point the system can and might just break down, and that would be pretty bad for the poor in general.

Ah, but the "rich" would be starving too, so from an egalitarian standpoint, it would be great!

[Coito ergo sum]

http://www.bloomberg.com/news/2010-12-0 ... s-say.html

The most accurate foreign-exchange strategists say the euro’s worst annual performance since 2005 will extend into next year as the region’s sovereign-debt crisis saps economic growth.

Ouch...that sucks...